Foundation research

Why advocacy for “free trade” continues to hit a brick wall

“Free traders are trapped in a public policy version of groundhog day», Julien Sanchez wrote in 2003, “forced to refute the same spurious arguments over and over, decade after decade.” It’s been almost another decade since then, and Sanchez’s point is equally on point.

Blake MastersA Trump-backed businessman who is currently running for the US Senate in Arizona, recently held a Q&A on his Instagram page where he announced his support for tariffs on Chinese goods.

He follows the reasoning of the trump administration that Chinese government interventions, such as subsidies for certain exporters, give their products an unfair advantage over U.S. products in international trade. The only sensible policy for America, they say, is to retaliate with its own tariffs.

The idea of ​​give and take tariffs goes back at least to Thomas Jefferson in American politics. But when Masters says “free trade” can’t even exist unless nobody intervenes in their commercial policies at all, it misses the fact that economists never let tariffs in some countries alter their support for the elimination of trade restrictions at home. Free trade does not need total freedom to remain a good idea.

Make trading easier, not harder

Adam Smith, whose 1776 book The Wealth of Nations is considered one of the greatest attacks on protectionism ever written, was fully aware that a world with total free trade could only ever be a “utopia”. And even to Smitha country that refrains from trading with others “would obstruct rather than promote[e] the progress of their country towards real wealth and greatness. Unlike Masters, Smith saw no economic reason for tariffs in the realistic case of free trade.

One of the reasons why, as a business journalist Frédéric Bastiat would say so years after Smith, it is because “reciprocal obstacles could only be reciprocally harmful”. Commerce is a two-way street, after all. If you prevent people from buying your product, you will also have a harder time selling it.

Modern economists like Leland Yeager have also tried to drive home the idea that “foreign trade barriers deprive foreigners and deprive us of the potential gains from trade, just as our own barriers do”. The best thing to do is to lower those barriers as much as possible, not raise them even higher.

To say that economists generally agree on anything can be very dangerous, but it’s no exaggeration to say that they primarily support freedom to trade regardless of other countries’ tariffs. Economist Don Boudreaux is even willing put his own money into it. And Paul Krugman, who won the Nobel Prize for his work on trade theory, goes so far as to say that the “economist’s” case for free trade is the absence of internal tariffs, come what may. When Masters claims that free trade with China is an impossible dream, he misunderstands what it means – and always has meant – to be a free trader.

How “Free Trade” Misleads

Why have trade economists had to repeat the exact same argument over and over, year after year? I suspect that an overlooked reason (among many others) because the rhetoric they use puts them at a disadvantage from the start, and that boils down to the phrase “free trade.” The two sides often find themselves arguing over two very different things.

As economic historian Deirdre McCloskey points out, how people say things matters a lot. For instance, she thinks that calling the West’s economic system “capitalism” makes people believe that getting more capital is what drives the economy, when it’s innovative ideas that get the most attention. But why stop at criticizing a single word if there are rhetorical problems hidden in others?

Masters’ argument on free trade reveals that the same misstep occurs in the trade debate as well. If you haven’t read the Smith and Bastiat classics, it makes sense to believe that supporting “free trade” only means supporting a fully open world economy; that is exactly what these words mean.

“Trading” means there is more than one party involved, since you cannot trade something with yourself. So if we call trade “free”, we are implying that everything traders must be completely free from government interference. The average economist will agree that this is the end goal, even though he knows we will never get there. But if they only advocated for this type of free trade, then Masters’ idea that free trade with Communist China cannot exist would be a very good point.

Economists actually argue for “freer trade than it otherwise would be,” which lacks the punch it needs to justify taking up space in newspapers and debates. Neither does the usual substitute for “unilateral free trade”. But if free traders want to stop repeating themselves to people like Masters, then it’s time to be clearer about what they mean when they argue for “free trade.”

The answer could be as simple as calling it “freedom to trade,” which puts more emphasis on letting people make their own choices about what they buy. These choices may not come from free governments abroad, but citizens are still allowed to make them if they choose. This is what supporting “free trade” really means.

Whatever the better term, the issues here are not just semantic. They could be peoples’ livelihoods. If someone in power (like Blake Masters) falls on the goodsought idea that free trade helps lift the poor out of poverty and think that “free trade” only means trade that is equally free on all sides, then they will likely have a very different policy prescription than economists who have studied the issue. Like Masters and Trump, they could try to “balance” trade with more tariffs, making it also UNfree for everyone.

Today’s free traders are the last debaters of a rich tradition, and they won’t be the last to argue for it. But by changing the rhetoric they use, they might just make it easier for those who come after them to convince everyone of a simple truth: letting people choose for themselves is a good thing.